SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from n/a to n/a
Commission File Number 0-27192
ASCENT ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1930707
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Tabor Center
1200 Seventeenth Street, Suite 2800
Denver, Colorado 80202
(Address of principal executive office)
(303) 626-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12)
months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No__
The number of shares outstanding of the Registrant's Common Stock as of
September 30, 1997 was 29,755,600 shares.
<PAGE>
EXHIBIT INDEX
No. 10.1 Buena Vista International, Inc. - Beacon
Communications Corp. Letter Agreement dated
as of April 1, 1996 (Confidential Treatment
Requested).
No. 10.2 Term Sheet for Local Television License
Agreement for the Denver Nuggets and Colorado
Avalanche between Ascent Entertainment Group,
Inc. and Fox Sports Rocky Mountain (Confidential
Treatment Requested).
No. 27.0 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
Ascent Entertainment Group, Inc.
By: /s/ Arthur M. Aaron
Arthur M. Aaron
Vice President Business and
Legal Affairs
Date: November 21, 1997
<PAGE>
EXHIBIT 10.1
^ Confidential Treatment Requested
As of April 1, 1996
Beacon Communications Corp.
1041 North Formosa Avenue Suite 200
Santa Monica Building
Los Angeles, CA 90046
Re: "AFO"
Gentlemen:
The following sets forth the terms of the agreement between Buena Vista
International, Inc. ("BVI") and Beacon Communications Corp.
("BEACON") with respect to the acquisition of exclusive distribution and other
rights by BVI to the proposed full length theatrical motion picture
tentatively entitled "AFO", formerly known as "Air Force One" and "The
Untitled Harrison Ford Project" (the "PICTURE").
1. CONDITIONS PRECEDENT: BVI shall have no obligation under this
Agreement unless and until: (a) BVI approves chain-of-title and all other
relevant underlying agreements relating to production and distribution of the
Picture in the BVI Territory (as defined below) as may be reasonably required
by BVI (BVI shall have Twenty [20] business days to object to any documents
supplied by Beacon or to request additional documentation after initial
documentation is delivered to BVI); (b) Beacon has executed and delivered all
documents in form and substance satisfactory to BVI to grant to BVI and to
perfect a security interest in and to the Picture in the BVI Territory (as
defined below) including, without limitation, BVI's distribution rights
therein and all products, proceeds and revenues derived from the exploitation
of the Picture in the BVI Territory (as defined below) including, but not
limited to, UCC-1, security agreements, and mortgages of copyright; (c) fully
executed agreements, satisfactory in form to BVI, from all prior lienholders
in the Picture stating that if any or all of them foreclose their respective
liens, they, and/or any purchaser of the Picture, will be subject to the terms
of this Agreement and that BVI shall quietly and peacefully enjoy and possess,
during the entire period of its exclusive rights hereunder, all of the
distribution and other rights herein granted and agreed to be granted to BVI;
and (d) Beacon makes Complete Delivery (as defined below) on or before
SEPTEMBER 1, 1997 ("DELIVERY DATE") (subject to the terms of Paragraph 22. and
Paragraph 23. below) of the Picture which conforms to the following (provided,
that each of the following specifications is of the essence of this Agreement;
provided, further, that for such time as BVI in its reasonable business
judgment determines that Beacon will make Complete Delivery of the Picture in
conformity with each of the following [and subject to the terms hereof])
conditions, BVI shall perform its obligations under subparagraph 3.a. below
with respect to "cash flowing" the Picture; provided, however, that if BVI
determines that one (1) or more of the following conditions will not be
satisfied, BVI shall be relieved of its obligation to pay the Advance (as
defined below) and the Additional Advance (as defined below), as
applicable, and BVI shall have the right to terminate this Agreement by
written notice to Beacon (provided, that if BVI should so terminate the
Agreement, then Beacon shall within Thirty [30] days following such
termination by BVI pay BVI an amount equal to all sums theretofore paid to
Beacon by BVI hereunder [with interest at the rate specified in subparagraph
3.a. below, from the date of receipt of such funds by Beacon, in each
instance]) (i) the Picture shall be shot in color and on 35 millimeter or 70
millimeter film stock, technically suitable for first class theatrical
distribution; (ii) the Picture shall be shot with an aspect ratio of 2.35:1
and without use of a hard matte; (iii) the Picture shall be shot in the
English language; (iv) the Picture shall be shot substantially in accordance
with such version of the script "Air Force One", written by Andrew Marlowe, as
was approved by BVI on September 15, 1996; (v) the Picture shall star Harrison
Ford ("Ford") as the President of the United States; (vi) the Picture shall be
directed by Wolfgang Petersen ("Petersen") (or by such other director as is
approved in writing by BVI prior to the commencement of principal photography,
provided, that subject to the terms of this subparagraph 1.(d)(vi), Petersen
shall not be deemed an "essential element" of the Picture); (vii) the Picture
has an MPAA (or successor organization) rating no more restrictive than "R"
rating; (viii) the Picture shall be not less than Ninety (90) minutes and not
more than One Hundred Twenty Six (126) minutes including credits; (ix) the
Certified Negative Cost (as defined below) of the Picture is an "all in"
figure of not less than ^ ^ Million Dollars ^ ^; (x) Beacon shall obtain all
synchronization, performance and master use music licenses reasonably required
by BVI on a complete buy-out basis for all media to exercise any and all of
the rights granted in this Agreement including the right to advertise and
promote the Picture without payment by BVI to any third party, excluding
performing rights payments; and (xi) Beacon shall deliver to BVI all items
specified in Exhibit "DR", at Beacon's sole cost.
2. DISTRIBUTION:
a. Beacon does hereby irrevocably grant, assign and license to BVI
the exclusive right, title and interest in and to the Picture and each of its
elements and all exclusive rights to distribute, exhibit, market and exploit
the Picture in any and all manner and all languages and in all media, now
known or hereafter devised including, without limitation, theatrical,
non-theatrical, all forms of home video cassettes/discs, cartridges, video on
demand, near video on demand, DVD, CVD, tapes or similar devices, and any
other formats or delivery systems now known or hereafter devised (including,
without limitation, so-called interactive formats [e.g. CD-I, CD-ROM, etc.])
which are intended primarily for home viewing ("VIDEOGRAMS") and all forms of
television including, without limitation, standard, non-standard,
subscription, pay television, cable and basic cable, satellite, etc.
(including pay-per-view), fiber optic and digital delivery systems, etc.
("TELEVISION"); novelization; the right to advertise, publicize and promote
the Picture including, without limitation, the right to excerpt and/or
synopsize the Picture and/or screenplay for the Picture (provided, that any
such excerpt and/or synopsis shall not exceed Seven Thousand Five Hundred
[7,500] words in length); commercial tie-ins (subject to the rights of
principal talent under their respective agreements with Beacon [all relevant
portions of which Beacon agrees to deliver pursuant to the delivery provisions
of subparagraph 3.i. below]); the right to change the title of the Picture;
the right to finance and/or produce (if none currently exists) and distribute
a "making of" promotional film (subject to the rights of Harrison Ford of
which Beacon gives BVI written notice at the time of Complete Delivery [as
defined below]); the right to cut or edit the Picture (subject to the terms of
Paragraph 5. below, the terms of the DGA Agreement and to the rights of the
director under the director's agreement with Beacon [of which rights Beacon
shall give BVI written notice as part of Complete Delivery (as defined below)
of the Picture to BVI]); the right to subtitle and dub the Picture (subject to
the rights of third parties, of which Beacon shall give BVI written notice as
part of Complete Delivery of the Picture to BVI); the right with respect to
all persons appearing in the Picture or performing production services therein
to issue and authorize publicity concerning such persons and the right to use,
reproduce, transmit, broadcast, exploit, publicize and exhibit their names and
likenesses (subject to third party agreements with Beacon, of which Beacon
shall deliver a written account of pertinent points pursuant to the delivery
provisions of subparagraph 3.i. below) in transcriptions, advertising,
distribution and exploitation of the Picture in the following territories: (i)
the universe, excluding the United States and Canada; and (ii) all of the
respective territories, protectorates and possessions of each country in the
universe (excluding the territories and possessions of Canada and all
territories, possessions and commonwealths [including Puerto Rico] of the
United States), including planes and ships flying the flag of any of such
countries, wherever situated (altogether, the "BVI TERRITORY"). The countries
not included in the BVI Territory shall be referred to as the "BEACON
TERRITORY". Each party shall be solely responsible for all distribution costs
and expenses in connection with the Picture in its respective territory
including, without limitation, advertising costs and costs associated with the
manufacture of prints and Videograms (provided, that BVI's distribution costs
and expenses in connection with the Picture shall be subject to recoupment as
provided hereinbelow).
b. The term of this Agreement (the "TERM") shall commence as of the
date hereof and continue in perpetuity.
c. BVI agrees to comply with the credit and billing requirements
specified by Beacon, subject to applicable guild requirements (it is
understood and agreed that BVI will abide by any and all third party credit
restrictions of which it receives written notice, which Beacon agrees to
provide pursuant to the delivery provisions of subparagraph 3.i. below).
Beacon agrees that in the BVI Territory the Picture shall include a BVI
distributor's credit and a BVI presentation credit in accordance with the
terms of subparagraph 2.f. below. Beacon agrees that a subdistributor in the
BVI Territory may include a distributor's credit (on a separate title card
which also includes a logo selected by such subdistributor). Beacon may not
use the BVI name, or the name of any parent, subsidiary or affiliate of BVI in
connection with Beacon's distribution and/or exploitation of the Picture in
the Beacon Territory. No casual or inadvertent failure by BVI or any of its
subdistributors or licensees to comply with the credit and billing
requirements specified by Beacon shall constitute a breach of this Agreement.
BVI agrees to cure any such failure to comply on a prospective basis;
provided, that such cure can be effected without material expense to BVI.
d. Except as specifically set forth herein, all other rights in
the Picture are retained by Beacon including, without limitation: (i) literary
publishing rights (excluding novelization rights); (ii) soundtrack rights
(provided, that such rights shall be subject to the terms of Paragraph 7.
below); (iii) music publishing rights (provided, that such rights shall be
subject to the terms of Paragraph 7. below); and (iv) the right to exploit
so-called merchandising rights ("RESERVED RIGHTS"); provided, however, that
BVI (and affiliates) shall have the right to purchase and/or create
promotional aids, point of purchase materials, etc., to sell or give away in
conjunction with the marketing and publicizing of the Picture as contemplated
hereunder; provided, further, that BVI shall not have the right to sell such
materials to the general public. It is understood and agreed that "Sequel
Rights" (as defined below) to the Picture shall be subject to the terms of
Paragraph 12. below.
e. All "Theme Park Rights" in the Picture in the BVI Territory
as well as all "Location Based Entertainment Rights" in the Picture throughout
the BVI Territory shall be "frozen" as between BVI, on the one hand, and
Beacon, together with Beacon's licensees and assigns, on the other hand (i.e.
neither party shall have the right to exploit either the "Theme Park Rights"
or the "Location Based Entertainment Rights" without the prior written consent
of the other); provided, that Beacon shall use its best efforts to acquire
Theme Park Rights as well as Location Based Entertainment Rights at the time
of contracting for the services of third parties in connection with the
Picture. As used herein, "THEME PARK RIGHTS" shall mean the sole and
exclusive right, during the Term, to use the Picture, characters, scenes, sets
and props therefrom and elements thereof and/or footage from the Picture in
theme parks including, without limitation, Disney's theme parks and Studio
Tours, as elements thereof. As used herein, "LOCATION BASED ENTERTAINMENT
RIGHTS" shall mean the sole and exclusive right, during the Term, to use the
Picture, characters, scenes, sets, props and/or footage from the Picture
therefrom and elements thereof and/or footage from the Picture in so-called
"location based entertainment centers" as elements thereof.
f. Beacon agrees that the Picture shall include a BVI
distributor's credit and a BVI presentation credit in accordance the
following:
(i) In the BVI Territory, the Picture shall include a BVI
distributor's credit (or other logo of the Walt Disney Studios Motion Picture
Group) in a form to be determined by BVI in its sole discretion on a separate
card in the main titles which may have an animated logo of BVI (or other label
of the Walt Disney Studio Motion Picture Group to be determined in the sole
discretion of BVI). BVI may use the aforementioned distributor's credit both
on-screen (on the aforesaid one [1] card) and in advertising and promotion for
the Picture (i.e. display of the aforesaid logo in advertisements, etc.).
(ii) In the BVI Territory, in addition to the distributor's
credit specified in subparagraph 2.f.(i) above, the Picture shall include (A)
a presentation credit (to Touchstone Pictures, Hollywood Pictures or other
presentation credit as BVI deems appropriate) in the main titles, and in all
paid advertising in the BVI Territory above or before the title of the Picture
and (B) a logo credit (to Touchstone Pictures, Hollywood Pictures or other
presentation credit as BVI deems appropriate) in the main and end titles and
in all paid advertising and promotion for the Picture.
g. BVI agrees that the Picture shall include the following
Beacon credits:
(i) In the BVI Territory, Beacon shall be accorded a
presentation credit immediately following BVI's presentation credit (or the
presentation credit to any other BVI-related entity to which BVI has assigned
its presentation credit), in the main titles (if any, and otherwise in the end
titles) and in paid advertisements in which BVI receives its presentation
credit, in the billing block portion (if any) of paid ads (including excluded
ads) issued by or under the control of BVI in which the "Regular Billing
Block" appears (i.e., in which credit is accorded in such billing block to the
cast, producers, directors, writers, etc.) in substantially the form, "in
ASSOCIATION with Beacon Films" (on a separate card) in the same size as BVI's
presentation credit.
(ii) In the BVI Territory, a company logo for Beacon may appear
as an animated logo on screen in any one sheets for the Picture issued or
controlled by BVI in which BVI's logo appears and in paid advertisements
(including excluded ads) for the Picture issued or controlled by BVI. Such
logos shall be equal in size to BVI's logo (provided, that in determining the
size of such logos, BVI may take into account the relative physical characterist
ics of such logos and may depict such logos proportionately). Placement of
such logos on screen shall be as follows: Beacon's logo shall appear
immediately following BVI's logo in the main titles and Beacon's logo shall
appear immediately preceding BVI's logo in the end titles. Placement of such
logos in one sheets and in the billing block portion of paid advertisements
shall be substantially comparable to placement of BVI's logo (e.g., if BVI's
logo appears in the lower right hand corner of the billing block, Beacon's
logos shall appear in the lower left hand corner of such billing block).
(iii) In the BVI Territory, Beacon shall be accorded a
"produced by" credit naming up to two (2) individuals designated by Beacon in
substantially the form "Produced by __ _______________", as follows: (A) below
or after the title, on screen on a separate card in the main titles (if any,
and otherwise in the end titles), in an average size of type not less than the
average size type utilized to accord any other such producer an individual
credit on screen; (B) in the billing block portion (if any) (i.e., if there is
no billing block such credit shall not be accorded) of paid ads issued or
controlled by BVI in which the Regular Billing Block appears, below or after
the regular (not artwork) title in such billing block, in an average size of
type not less than the average size of type utilized to accord the director an
individual credit in such billing block; and (C) in the billing block portion
(if any) (I.E., if there is no such billing block such credit shall not be
accorded) of excluded ads issued or controlled by BVI in which the director is
accorded an individual credit in such billing block, below or after the
regular (not artwork) title in such billing block, in an average size of type
not less than the average size of type utilized to accord credit to any other
such producer in such billing block. Notwithstanding the foregoing, the
designee(s) of Beacon shall not be entitled to receive credit in
congratulatory, nomination and/or award ads (naming only the person[s]
honored), ads announcing a personal appearance (naming only the person[s]
making the appearance), radio ads and audio portion of teasers, trailers and
television ads. Subject to applicable guild restrictions, placement of such
credits on screen and in paid ads shall be immediately following the writing
credit(s).
(iv) In the BVI Territory, Beacon shall be accorded executive
producer credit to two (2) individuals to be designated by Beacon in
substantially the form "Executive Producer _____________", as follows: (A)
below or after the title, on a separate card in the main titles (if any, and
otherwise in the end titles), in an average size of type not smaller than the
average size of type utilized to accord credit to the aforesaid producer of
the Picture (specified in subparagraph 2.g.[iii] above) on screen and in the
billing block portion (if any) (i.e., if there is no billing block such credit
shall not be accorded) of paid ads issued or controlled by BVI in which the
"Produced by" credit set forth in subparagraph 2.g.(iii) above is accorded,
below or after the regular (not artwork) title in such billing block, in an
average size of type not smaller than the average size of type utilized to
accord individual credit to the aforesaid producer of the Picture in such
billing block; and (B) in the billing block portion (if any) (i.e., if there
is no such billing block such credit shall not be accorded) of excluded ads
issued or controlled by BVI in which the director is accorded an individual
credit in such billing block, below or after the regular (not artwork) title
in such billing block, in an average size of type not less than the average
size of type utilized to accord credit to the aforesaid producer in such
billing block. Notwithstanding the foregoing, the designee(s) of Beacon shall
not be entitled to receive credit in congratulatory, nomination and/or award
ads (naming only the person[s] honored), ads announcing a personal appearance
(naming only the person[s] making the appearance), radio ads and audio portion
of teasers, trailers and television ads. Subject to applicable guild
restrictions, placement of such credits on screen and in paid ads shall be
immediately following the credit to the Director of Photography.
h. The rights granted by Beacon to BVI in this Paragraph 2.
shall be referred to herein as the "Rights Granted".
3. COMPENSATION TO BEACON:
a. ADVANCE:
(i) Beacon agrees to make Complete Delivery (as
defined below) of the Picture to BVI in accordance with Exhibit "DR" (free and
clear of any claims, liens or encumbrances [excluding only laboratory liens,
customary security interests granted to applicable guilds (if any) and/or to a
completion guarantor providing a completion guarantee in connection with the
Picture, and the security interest granted to BVI pursuant to this Agreement,
all as specifically set forth on Exhibit "PE", which is attached hereto and
incorporated herein by this reference (the "Permitted Encumbrances")], except
as otherwise agreed to by the parties hereto in advance and in writing) on or
before the Delivery Date (as defined below). BVI agrees to pay Beacon
(provided, that Beacon is not in breach or default of any of its
representations, warranties, covenants or agreements hereunder and subject to
the terms, conditions and provisions hereof [including, without limitation,
subparagraph 1.d. above]) and Beacon agrees to accept as full consideration
for the rights granted to BVI by Beacon herein an amount ("ADVANCE") which
shall be determined in accordance with the following: The amount of the
Advance shall be equal to ^ ^ Dollars ^ ^; provided, that the sum of the
Advance and the Additional Advance (as defined below) shall not exceed an
amount which is equal to ^ ^ percent ^ ^ of the Certified Negative Cost (as
defined below and subject to the terms of Paragraph 8. below) of the Picture
(provided, that such amount does not include interest which shall begin to
accrue during the Production Period [as defined below]), subject to the terms
of subparagraph 3.m. below. The Advance (together with interest thereon,
which shall accrue at the rate specified in subparagraph V.C. of Exhibit "NP",
which is attached hereto and incorporated herein by this reference [as
modified by Rider "NP", which is attached hereto and incorporated herein by
this reference]) shall be recoupable in accordance with the terms of
subparagraphs 3.b., 3.c., 3.d., 3.e. and 3.f. below and Exhibit "NP";
provided, that subject to the terms of this subparagraph 3.a. and of
subparagraphs 3.e. and 3.f. below, ^ ^. The Advance shall be payable to
Beacon by BVI in accordance with one (1) of the following to be determined by
Beacon in its good faith business judgment: (A) pursuant to a "Cash Flow
Schedule" for the Picture which shall reflect the pro rata portion of the
Validated Budget (as defined below), subject to the terms of Paragraph 8.
below, for the Picture represented by the Advance and the Additional Advance
over the course of pre-production, production and post-production of the
Picture ("PRODUCTION PERIOD") (provided, that the aforesaid "Cash Flow
Schedule" shall be subject to the prior written approval of BVI; provided,
further, that the aforesaid "Cash Flow Schedule" shall be subject to the terms
of Paragraph 8. below); or (B) One Hundred percent (100%) of the Advance on
Complete Delivery (as defined below) of the Picture by Beacon to BVI. It is
understood and agreed that Beacon has elected to be paid the Advance in
accordance with the terms of subparagraph 3.a.(i)(A) above. Interest on the
Advance shall commence to accrue at such time as the Advance (or portions
thereof) is actually paid to Beacon hereunder. Beacon shall submit a "Cash
Flow Schedule" for approval by BVI on or before the commencement of principal
photography of the Picture.
(ii) Beacon shall have the right exercisable by written
notice to BVI to an Additional Advance ("ADDITIONAL ADVANCE") equal to an
amount not greater than ^ ^ Million Dollars ^ ^; subject to the aforesaid
provision that the sum of the Advance and the Additional Advance shall not
exceed an amount which is equal to ^ ^ percent ^ ^ of the Certified Negative
Cost for the Picture (subject to the terms of subparagraph 3.m. below). It is
understood and agreed that Beacon has elected to be paid an Additional Advance
in the amount of ^ ^ Dollars ^ ^. Such Additional Advance shall be paid
pursuant to the "Cash Flow Schedule" specified in subparagraph 3.a.(i)(A)
above. BVI shall have the right to recoup the Additional Advance (together
with interest thereon, which shall accrue at the rate specified in
subparagraph V.C. of Exhibit "NP") from all Gross Receipts (as defined below)
earned by BVI from the exploitation of the rights in the Picture granted
herein including, without limitation, Gross Receipts attributable to BVI's
exercise of the theatrical distribution rights in the Picture hereunder.
(iii) Beacon agrees that the Advance and the Additional
Advance shall be used solely for the purpose of paying the costs of production
of the Picture included in the Certified Negative Cost of the Picture. Any
portions of the Advance paid by BVI to Beacon shall be remitted by Beacon to
Presidential Productions, Inc. ("PPI") for the purpose of paying such costs of
production of the Picture. Beacon hereby irrevocably authorizes and directs
BVI to pay the Advance and the Additional Advance into a production account (or
as otherwise directed by the Guarantor [as defined below] or by its agent
International Film Guarantors, L.P. ["IFG"] under the Completion Guaranty
Agreement [as defined below]) for use as specified in the Completion Guaranty
Agreement, dated as of __________, 1996, between BVI and Fireman's Fund
Insurance Company ("Guarantor"). Any payment of the Advance and/or the
Additional Advance by BVI to the aforesaid production account (or as otherwise
directed by the Guarantor or IFG under the Completion Guaranty Agreement)
shall be deemed to be payments made to and for the benefit of Beacon
hereunder, shall satisfy BVI's obligations to Beacon hereunder to the extent
of such payments made to the aforesaid production account (or as otherwise
directed by Guarantor or IFG under the Completion Guaranty Agreement), and
shall be in reduction of the Advance and/or the Additional Advance payable to
Beacon hereunder.
b. CONTINGENT COMPENSATION: "GROSS RECEIPTS" shall be defined
pursuant to the applicable provisions of Exhibit "NP" throughout the BVI
Territory. Gross Receipts, which shall include the Videogram Receipts, as set
forth in subparagraphs 3.c., 3.d. and 3.e. below, shall be subject to the
exclusions and deductions set forth in Exhibit "NP" (subject to the terms of
Paragraph 26. below), inclusive of distribution, manufacturing, duplication
and advertising related to Videograms. Subject to the terms of subparagraph
3.f. below, BVI shall deduct and retain the following from Gross Receipts
(provided, that in accordance with the provisions of subparagraph 3.a. above,
the Advance and interest on the Advance shall not be recouped from Gross
Receipts attributable to exercise by BVI of the theatrical distribution rights
in the Picture, subject to the provisions of subparagraphs 3.e. and 3.f.
below) in the following order of priority and on a continuing basis:
(i) BVI shall first deduct and retain for its own account the
following distribution fees from the Gross Receipts;
(A) theatrical/non-theatrical, all Television and
Videograms (provided, that the application of this subparagraph 3.b.[i][A]
shall be subject to the terms of subparagraph 3.c. below) - ^ ^.
(B) The respective distribution fees provided for in
subparagraph 3.b.(i)(A) above shall not include third party distributor fees,
if any. The following caps (i.e. points which the distribution fees shall not
exceed) shall apply to the sum of (x) the respective BVI distribution fees set
forth above and (y) any applicable third party distribution fees: (aa)
theatrical/non-theatrical - ^ ^; (bb) Television - ^ ^; and (cc) Videograms -
^ ^ (provided, that the terms of this subparagraph 3.b.[i][B][cc] are
applicable only in the case of third party distributors which report to BVI on
the basis of One Hundred percent [100%] of the gross receipts of such third
party distributors). By way of example only, the theatrical/non-theatrical
distribution fee provided for in subparagraph 3.b.(i)(A) shall not exceed ^ ^
on an "all-in" basis (including third party distribution fees, as applicable)
i.e. the total amount of (dd) distribution fees deducted and retained by BVI
and (ee) third party distribution fees shall not exceed ^ ^ of
theatrical/non-theatrical Gross Receipts (the fees referenced in subparagraphs
3.b.[i][A] and 3.b.[i][B] shall be referred to herein as "DISTRIBUTION FEES").
(C) For purposes of clarity, BVI in determining whether to
avail itself of existing self-distribution options shall accord the Picture
treatment under this subparagraph 3.b.(i) which is similar to that accorded to
other third party BVI acquired product.
(D) The parties agree that the Distribution Fee applicable
to novelization Gross Receipts (if any) shall be equal to that set forth in
subparagraph 3.b.(i)(A) above, subject to the terms of subparagraph 3.b.(i)(B)
above.
(ii) BVI shall next deduct and retain all distribution costs
paid or incurred by BVI in commercially exploiting the Picture including,
without limitation, residuals, so-called "off the tops", the Videogram Costs
(as defined below), print and advertising costs, delivery costs paid or
incurred by BVI, subtitling and dubbing costs, all distribution costs
customarily paid or incurred in connection with the exercise of novelization
rights in the Picture (including, without limitation, sales, marketing and
fulfillment, development and manufacturing costs), and all other customary
Distribution Costs, as defined in Paragraph IV. of Exhibit "NP" (the costs
referenced in this subparagraph 3.b.[ii] shall be referred to herein as
"DISTRIBUTION COSTS") (provided, that there shall be no so-called "double
deductions" of Distribution Costs hereunder by BVI);
(iii) BVI shall next deduct and retain interest on the
Additional Advance;
(iv) BVI shall next deduct and retain the Additional
Advance;
(v) BVI shall next deduct and retain interest on the Advance
(less such portion of the Advance [if any] which BVI shall have recouped
pursuant to the terms of subparagraph 3.[f]. below);
(vi) BVI shall next deduct and retain the Advance as set forth
in subparagraph 3.a. above (subject to the terms of subparagraph 3.[f]
below).
The Gross Receipts remaining after continuing deduction of the amounts set
forth in subparagraphs 3.b.(i) through 3.b.(vi) above, if any, after BVI has
deducted its Distribution Fees, Distribution Costs, interest on the Advance,
interest on the Additional Advance, the Additional Advance and the Advance on
a continuing basis, in accordance with Exhibit "NP", shall be payable: ^ ^.
For purposes of clarity, and subject to the terms of subparagraphs 3.c.(i) and
3.c.(ii) below, to the extent that BVI or a subsidiary of BVI or a company
affiliated with BVI exercises the right to distribute Videograms embodying the
Picture hereunder, then there shall be included in Gross Receipts an amount
equal to ^ ^ of the sums actually received by BVI or such subsidiary or
affiliated company (less taxes, rebates, discounts, credits for actual returns
and a reserve for returns) from the exercise of the aforesaid Videogram
distribution rights. It is agreed and understood that BVI shall have the
right to recoup an amount equal to ^ ^ as a Distribution Cost hereunder from
any source of revenue from any country in the BVI Territory in connection with
that certain waiver of overhead referenced in the letter, dated September 13,
1996, from Walt Disney Motion Pictures Group to Tom Bliss.
c. VIDEOGRAM RECEIPTS FOR BVI FROM THIRD PARTY LICENSEES:
(i) With respect to sums actually received by BVI or any
subsidiary or affiliated company of BVI from the sales of Videograms embodying
the Picture in the BVI Territory in the rental market by third party
licensees, ^ ^ of revenues less actual costs incurred by BVI or its
affiliates, if any (e.g. mastering, artwork, duplication, marketing and other
Distribution Costs in accordance with Exhibit "NP") in connection therewith,
shall be included in the Gross Receipts.
(ii) With respect to sums actually received by BVI or any
subsidiary or affiliated company of BVI from the sales of Videograms embodying
the Picture in the BVI Territory in the sell-through or repriced rental market
by third party licensees, ^ ^ of revenues less actual costs incurred by BVI or
its affiliates, if any (e.g. mastering, artwork, duplication, marketing and
other Distribution Costs in accordance with Exhibit "NP") in connection
therewith, shall be included in the Gross Receipts.
(iii) For purposes of clarity, it is agreed that with
reference to subparagraphs 3.c.(i) and 3.c.(ii) above, solely for purposes of
issuing the ^ ^ (as defined below), ^ ^ of the sums actually received by BVI
(less costs) or any subsidiary or affiliated company of BVI shall be included
in Gross Receipts.
(iv) For purposes of clarity, the amounts contributed to Gross
Receipts in accordance with the terms of subparagraphs 3.c.(i) and 3.c.(ii)
above shall not be subject to the Videogram Distribution Fee set forth in
subparagraph
3.(b)(i) above.
(v) It is understood and agreed that with respect to
subparagraphs 3.c.(i) and 3.c.(ii) above, the words "sums actually received"
shall be deemed to include such portions of advances to BVI by third party
distributors as are reported as nonrefundable and earned (and specifically
allocable to this Picture) from sales of Videograms of the Picture in the
rental market and/or repriced rental and/or sell-through market (as
applicable).
d. CROSS-COLLATERALIZATION: All sources of revenue from all
countries (excluding revenue from all countries from exploitation by BVI of
the Picture in the Videogram medium in so-called interactive formats [e.g.
CD-I, CD-ROM]) in the BVI Territory shall be fully cross-collateralized from
and against the Distribution Fees and Distribution Costs from the BVI
Territory, interest on the Advance, the interest on the Additional Advance,
the Additional Advance and the Advance; provided, that the Advance and
interest on the Advance shall not be recouped from revenues attributable to
exercise by BVI of the theatrical distribution rights granted herein by
Beacon, subject (in the case of the Advance only) to the terms of subparagraph
3.b. above and subparagraphs 3.e. and 3.f. below; provided, that revenue from
exploitation by BVI of the Picture in the aforesaid so-called interactive
formats shall constitute a separate and distinct revenue stream for purposes
of cross-collaterization.
e. ^ ^
f. ^ ^.
g. VIDEOGRAM COSTS: "VIDEOGRAM COSTS" shall include all
distribution costs incurred by BVI (or a subsidiary or affiliate of BVI) in
connection with the distribution of Videograms hereunder including, without
limitation, all Distribution Costs specified in Exhibit "NP" (incurred in
connection with the distribution of Videograms hereunder), third party costs
incurred in relation to the duplication, manufacturing, sales, distribution,
creative costs, marketing, publicity and advertising of Videograms embodying
the Picture in the BVI Territory. The Videogram Costs shall also include a
reasonable reserve for anticipated returns (of up to Thirty Five percent
[35%], which may be increased by BVI if, in the exercise of its reasonable
business judgment, BVI determines that actual returns may exceed the foregoing
percentage [to be liquidated within Twelve (12) months, in each instance]).
h. THIRD PARTY PARTICIPATIONS: Beacon shall be solely
responsible for the preparation of accounting statements and payments and
other required documentation and the issuance of payments to third parties in
connection with all executory obligations of the Picture, including, without
limitation, the payment of all applicable profit participations, deferments,
credit bonuses, corporate and income taxes and the like derived from the
pre-production, production, and post-production (except as otherwise provided
in this subparagraph 3.h.) of the Picture. Beacon agrees that no third
parties shall have the right to audit and/or otherwise examine BVI's books and
records for any purpose whatsoever. The parties agree that BVI shall be
responsible for making all applicable guild, residuals and performing rights
payments with respect to the BVI Territory during the period of BVI's
exploitation of the Picture, and that any and all such payments shall be
deemed Distribution Costs hereunder.
i. DELIVERY: "COMPLETE DELIVERY" shall include delivery by
Beacon and acceptance by BVI of all items in Exhibit "DR", Exhibit "P",
Exhibit "PI" and Exhibit "R" ("Complete Delivery"), which are attached hereto
and incorporated herein by this reference. Beacon agrees that it shall, at
its own cost and expense, deliver to BVI all materials required to make
Complete Delivery of the Picture (subject to the terms of Paragraphs 22. and
23. below). In accordance with Exhibit "NP", any delivery costs incurred by
BVI in connection with the delivery of the Picture shall be deemed a
Distribution Cost and shall be recouped in the manner set forth in
subparagraphs 3.b., 3.c., 3.d. and 3.e. above. Beacon agrees that it shall
upon execution of this Agreement tender to BVI a set of fully executed copies
of Exhibit "A-1" and Exhibit "A-2" with respect to each laboratory in which
any of the items required for Complete Delivery is presently or shall prior to
the Delivery Date be located. Beacon agrees that as part of Complete Delivery
it shall upon execution of this Agreement tender to BVI executed copies of
Exhibit "B-1" and Exhibit "B-2", which are attached hereto and incorporated
herein by this reference. Beacon agrees (subject to the rights of SPE [of
which Beacon shall give BVI written notice as part of Complete Delivery of the
Picture to BVI]) to grant BVI access to any dubbed or subtitled versions of
the Picture in any and all languages spoken in the BVI Territory. BVI agrees
to grant Beacon access to any dubbed or subtitled versions of the Picture in
any languages spoken in the Beacon Territory; provided, that Beacon shall pay
all costs incurred in accessing such versions. For purposes of clarity, the
parties agree that as to those items described in Exhibit "DR" and/or Exhibit
"PI" as "Physical Delivery", Beacon shall make due and timely delivery of such
items to BVI at Beacon's sole cost and expense. As to those items described
in Exhibit "DR" and/or Exhibit "PI" as "Access", BVI shall be given access by
Beacon to such items and BVI shall manufacture therefrom elements as required
and all costs incurred by BVI in connection with such access and manufacture
of elements shall be deemed recoupable Distribution Costs hereunder. Beacon
represents and warrants that at the time of Complete Delivery and at all times
thereafter all materials required to make Complete Delivery of the Picture to
BVI (including, without limitation, the items specified on Exhibit "PI") shall
be held solely in Beacon's name at a laboratory(ies) in the United States
(provided, that BVI shall have a right of prior written approval with respect
to the choice of such laboratory[ies]). BVI hereby approves Fotokem, Pascal
Sound and Sound Deluxe (all in Los Angeles, California).
j. VALIDATED BUDGET: As used herein, "VALIDATED BUDGET" shall
mean the final budget that BVI validates, which Validated Budget shall include
costs customarily included in connection with the acquisition of all
underlying literary and musical rights with respect to the Picture and in
connection with the preparation, production, and completion of the Picture
(including the costs of materials, equipment, physical properties, personnel
and services utilized in connection with the Picture, both "above-the-line"
and "below-the-line"), contingency of up to Ten percent (10%) of the direct
cash cost of the Picture ("CONTINGENCY PORTION")(which Contingency Portion
shall be subject to the terms of Paragraph 8. below), completion bond fees
(which shall take into account any rebates), customary financing fees (as
applicable) and a fee in the amount of ^ ^ for producing and overhead
(provided, that any so-called "soft costs" [i.e. costs not actually paid to
third parties] other than the aforesaid producing and overhead fee which are
part of the Validated Budget shall require the prior written approval of
BVI). No participation (whether in gross receipts or otherwise) shall be
included in or made part of the Validated Budget. Beacon agrees to submit a
final budget in accordance with the terms of this subparagraph 3.j. for
validation by BVI on or before the commencement of principal photography of
the Picture.
k. CERTIFIED NEGATIVE COST: As used herein, the term "CERTIFIED
NEGATIVE COST" shall mean the aggregate of direct, out of pocket costs,
charges, and expenses paid, incurred and accrued in connection with the
acquisition of all underlying literary, musical and other rights with respect
to the Picture and in connection with the preparation, production, completion
and Complete Delivery of the Picture by Beacon to BVI and SPE including the
costs of materials, equipment, physical properties, personnel and services
utilized in connection with the Picture, both "above-the-line" and
"below-the-line" and including, without limitation, a fee in the amount of One
Million Five Hundred Thousand Dollars ($1,500,000) for producing and overhead
(provided, that any so-called "soft costs" other than the aforesaid producing
and overhead fee which are part of the Certified Negative Cost shall require
the prior written approval of BVI).
l. FINAL NEGATIVE COST REPORT: Beacon shall, not later than
Sixty [60] days after Complete Delivery of the Picture to BVI, deliver to BVI
an "ESTIMATED FINAL NEGATIVE COST REPORT" (i.e. a report certified by the
production accountant and authorized by an officer of Beacon setting forth the
estimated Certified Negative Cost of the Picture together with sums reasonably
expected to be expended within Sixty (60) days thereafter). A copy of (i) the
Validated Budget and (ii) a detailed "FINAL NEGATIVE COST REPORT" (i.e. a
report setting forth the final Certified Negative Cost of the Picture
certified as true and correct by Beacon's production accountant and by a duly
authorized officer of Beacon) shall be delivered to BVI within One Hundred
Twenty (120) days after Complete Delivery of the Picture to BVI. The Advance
if calculated on the Validated Budget shall be subject to later adjustments
necessary by reason of any change in the Final Negative Cost Report.
m. ^ ^ , BVI shall have the right exercisable in its sole
discretion to (A) invoice Beacon for an amount equal to the BVI Negative Cost
Refund (in which case Beacon shall pay BVI any and all such invoiced amounts
within Ten [10] days following the date on which BVI transmits such invoice to
Beacon) and if Beacon does not pay BVI an amount equal to the BVI Negative
Cost Refund within the aforesaid Ten (10) day period, BVI shall have the right
to (B) fully credit and deduct any or all of the BVI Negative Cost Refund not
paid by Beacon within the aforesaid Ten (10) day period against and from any
amounts due Beacon hereunder and/or under any other agreement(s) (including,
without limitation, those with respect to the motion picture currently
entitled "Playing God" [but excluding the agreement with respect to the motion
picture currently entitled "Thousand Acres"]) between BVI (or any related or
affiliated entity) and Beacon (or any related or affiliated entity). ^ ^.
n. ACCOUNTING/AUDIT: Beacon shall be accorded audit and
accounting rights as set forth in Exhibit "NP". Accordingly, Beacon agrees
that it shall not have the right to audit Videogram Costs under this Agreement
(including, without limitation, Videogram duplication and marketing
costs)(provided, that BVI shall upon request issue Beacon an affidavit signed
by a Financial Officer of BVI with respect to such manufacturing and
distribution costs).
o. BVI PRODUCTION AUDIT RIGHTS: BVI shall have the right to
audit Beacon's work papers and books of account during reasonable business
hours with respect to the Estimated Final Negative Cost Report, the Final
Negative Cost Report, the Validated Budget and/or any other production and/or
any other cost tracking and estimating reports for the Picture during the
pre-production, production and post-production periods and for up to Thirty
Six (36) months after delivery to BVI of the applicable Final Negative Cost
Report. If BVI serves written notice on Beacon within the applicable Thirty
Six (36) month period objecting to particular item(s) and stating the nature
of the objection, then insofar as the specified items are concerned the Final
Negative Cost Report shall not be final and binding. Beacon agrees that BVI
shall have the right to have a designated fiscal representative on the set
during all phases of production and at any and all post-production facilities
and meetings _____ _______during all phases of post-production.
p. DAILIES: BVI shall have the right to see all dailies on
cassette (wherever located) and all cuts including, without limitation,
director's cuts. Notwithstanding the foregoing, Beacon agrees to promptly
deliver to BVI (on 35mm film) copies of dailies for each day of the first
three (3) weeks of principal photography.
q. BEACON FUNDING RESPONSIBILITY: Provided BVI is not in breach
of its obligations to pay the Advance and the Additional Advance subject to
and in accordance with the terms of this Agreement, Beacon agrees to, and
shall be solely responsible to, cause to be paid the full amount of the
Validated Budget as and when needed to pay for costs of producing, completing
and delivering the Picture to BVI hereunder (or otherwise as and when required
by, and in the manner required by, the completion guarantor of the Picture),
and to pay such completion guarantor all fees payable to such completion
guarantor as and when due.
4. BVI DISTRIBUTION CONTROL: BVI shall consult with Beacon prior to
the initial theatrical release of the Picture in the BVI Territory and shall
apprise Beacon of the planned release date, the general marketing concepts and
the contemplated promotional approaches for the theatrical campaign.
Notwithstanding the foregoing, BVI shall have, subject to the terms of this
Agreement, complete, exclusive and unqualified discretion and control as to
the time, manner and terms of distribution, exhibition and exploitation of the
Picture, separately or in connection with other motion pictures, in accordance
with such policies, terms and conditions and through such parties as BVI in
its sole business judgment may determine proper or expedient and the decision
of BVI in all such matters shall be binding and conclusive upon Beacon.
Except as expressly set forth herein, BVI makes no express or implied
representation or warranty as to the manner or extent of any distribution or
exploitation of the Picture nor as to any maximum or minimum amount of monies
to be expended in connection therewith. BVI does not guarantee the
performance by any subdistributor, licensee or exhibitor of any contract
regarding the distribution and exploitation of the Picture. Beacon shall on
request use its best efforts to provide BVI such documents as may be necessary
or desirable for BVI to secure licenses and permits for the importation,
exportation and distribution of the Picture. BVI shall neither distribute nor
authorize distribution of any English language version of the Picture
(excluding subtitled version of the Picture) in any medium in the BVI
Territory prior to the date on which SPE causes the initial release of the
Picture in such medium in the Beacon Territory (provided, that exhibition of
the Picture at film festivals, invitational screenings and the like shall not
qualify as "distribution" within the meaning of this final sentence of
Paragraph 4.).
5. CUTTING RIGHTS: BVI shall have the right to change, add material
to, delete material from or edit the Picture only in order to conform with (i)
the timing requirements of exhibitors and other end users of the Picture
and/or (ii) the requirements of any recognized censorship board or agency in
the BVI Territory (or any part thereof) or the censorship requirements of
exhibitors or other end users (e.g. airplanes, ships, Television stations,
etc.) in the BVI Territory (or any part thereof) and/or (iii) other legal
requirements, subject to the DGA agreement and the obligations of Beacon to
Wolfgang Peterson (of which Beacon shall give BVI a full written account at
the time of Complete Delivery of the Picture to BVI).
6. REPRESENTATIONS AND WARRANTIES:
a. Beacon hereby represents and warrants that: (i) Beacon is a
subsidiary of Ascent Entertainment Group, Inc. ("Ascent"), which is a
__________________corporation with its principal office at 1200 17th Street,
Denver, Colorado 80202, (ii) Beacon is a Delaware corporation with its
principal office at 1041 North Formosa Avenue, Suite 200, Santa Monica
Building, Los Angeles, CA 90046, and is a corporation in good standing under
the laws of Delaware; (iii) Presidential Productions, Inc. ("PPI") is a
California corporation with its principal office at 1041 North Formosa Avenue,
Los Angeles, CA 90046; (iv) Beacon is duly legally authorized to enter into
this Agreement; (v) Beacon owns or controls all distribution rights in and to
the Picture in the BVI Territory and all literary, dramatic and original
musical material contained therein; (vi) neither the Picture nor any part
thereof (including, without limitation, the title of the Picture) nor the
exercise by any authorized party of any right granted to BVI hereunder will
violate or infringe the copyright, trademark, trade name, patent or any
literary, dramatic, musical, artistic, personal, private, civil or property
right or right of privacy, right of publicity, or any other right of any
person, firm or corporation or constitute unfair competition or defame any
person, firm or corporation; (vii) Beacon has not entered into and will not
enter into any agreement which is inconsistent with any of the provisions of
this Agreement and will not exercise any right or take any action or license
or authorize any other person to exercise any right or take any action or
license which conflicts with or knowingly prejudices the rights herein granted
to BVI; (viii) BVI shall not be obligated to make payments to any third party
in connection with the Picture except as specifically provided in subparagraph
3.h. above; (ix) subject to applicable guild restrictions and to the extent
permitted by pertinent talent agreements (which Beacon agrees to deliver
pursuant to the terms of subparagraph 3.i. above), with respect to all persons
appearing in the Picture, or performing production services therein, BVI has
the right to issue and authorize publicity concerning such persons and the
right to use, reproduce, transmit, broadcast, exploit, publicize and exhibit
their names, likenesses, transcriptions, films and other reproductions thereof
in connection with the distribution, exhibition, advertising and exploitation
of the Picture including the right to exhibit trailers and excerpts from the
Picture; (x) the Picture is unpublished; (xi) the Picture as delivered to BVI
shall be free and clear of any claims, liens or encumbrances except those
expressly permitted hereunder (or as expressly approved in writing by BVI);
(xii) Beacon is party to an agreement with Sony Pictures Entertainment
("SPE"), dated April 1, 1993, pursuant to which SPE shall cause the Picture
to be released theatrically in the United States; (xiii) as between Beacon and
BVI, Beacon shall be responsible for payment of One Hundred percent (100%) of
all amounts set forth in the Validated Budget and/or components of the
Certified Negative Cost; and (xiv) BVI will at no time be required to advance
funding in connection with the Picture in excess of the Advance and the
Additional Advance.
b. Beacon agrees to indemnify and hold BVI harmless from any and
all claims, actions or proceedings of any kind and from any and all damages,
liabilities, costs and expenses (including reasonable outside attorney's fees
and costs) relating to or arising: (i) out of any breach of any of the
warranties, representations and/or agreements made by Beacon contained in this
Agreement; (ii) out of any claim alleging facts which if true would constitute
such a material breach of this Agreement by Beacon; and/or (iii) in connection
with the pre-production, production and/or post-production of the Picture,
including, but not limited to, Beacon's failure to supply BVI with a complete
list of the Picture's credits.
c. BVI agrees to indemnify and hold Beacon harmless from any and
all claims, actions or proceedings of any kind and from any and all damages,
liabilities, costs and expenses (including reasonable outside attorney's fees
and costs) relating to or arising: (i) out of any breach of any of the
warranties, representations and/or agreements made by BVI contained in this
Agreement; (ii) out of any claim alleging facts which if true would constitute
a material breach of this Agreement by BVI; and (iii) out of actions taken
solely by BVI in connection with the marketing and distribution of the
Picture, other than to the extent that the liability arises from (A) actions
theretofore taken by Beacon or from the content of the Picture and/or (B)
claims, actions or proceedings from which Beacon is obliged to indemnify and
hold BVI harmless under the terms of subparagraph 6.b. above.
7. PAYMENTS BY BEACON TO BVI:
a. MUSIC PUBLISHING RIGHTS: The following shall apply to all
music composed and/or written for the Picture which is owned and/or
controlled, in whole or in part, directly or indirectly, by Beacon or any
affiliated music publisher ("Beacon Music"): Beacon (or its designee) shall
administer the music rights throughout the BVI Territory. All of the Beacon
Music shall be licensed by Beacon to BVI for no compensation so that BVI shall
possess all rights necessary in the BVI Territory in the Beacon Music required
for the exploitation of the Picture by BVI, as contemplated hereunder
(excluding rights not included in the Rights Granted, for example, the
soundtrack rights [subject to the terms of subparagraph 7.b. below]). Beacon
shall be entitled to an administrative fee of ^ ^ with respect to any and all
music publishing income (e.g. public performance, mechanicals, etc. or
incidental uses) derived from exploitation of the Beacon Music in the BVI
Territory including, without limitation, advances received by Beacon. The
balance of the aforesaid music publishing income less songwriter royalties (if
any) derived from exploitation of the Beacon Music in the BVI Territory shall
be remitted by Beacon to BVI; provided, that such remitted income shall be
applied by BVI toward recoupment by BVI of the Advance (and interest on the
Advance) and the Additional Advance (and interest on the Additional Advance)
until such time as BVI shall have recouped all such amount(s); provided,
further, that following such recoupment of the Advance (and interest on the
Advance) and the Additional Advance (and interest on the Additional Advance)
by BVI, Beacon shall retain One Hundred percent (100%) of the aforesaid music
publishing income (provided, that Beacon shall pay all songwriter royalties
[if any]).
b. SOUNDTRACK ALBUM: Beacon hereby grants BVI a Right of First
Negotiation with respect to the exploitation of the soundtrack of the Picture
for phonograph records, audio tapes, CDs or transcriptions (or any other form
or medium of such nature separate from the Picture) in the BVI Territory (any
and all of the foregoing "Soundtrack Rights") in accordance with the following
terms: For purposes of this subparagraph 7.b., the term "Right of First
Negotiation" means that if Beacon should desire to exercise any Soundtrack
Rights in the BVI Territory, Beacon shall, in each instance, give written
notice to BVI and immediately thereafter negotiate exclusively with BVI with
respect to acquisition by BVI of such Soundtrack Rights and if, after the
expiration of Forty Five (45) days following such notice from Beacon to BVI,
no agreement shall have been reached, then Beacon shall be free to negotiate
elsewhere with respect to such Soundtrack Rights.
c. BVI MUSIC ACCOUNTING AND AUDIT RIGHTS: Beacon shall keep its
books of account with respect to the rights specified in subparagraphs 7.a.
and 7.b. (if applicable) above at its principal place of business in the
United States. Beacon hereby grants BVI accounting and audit rights in
connection Beacon's exploitation of the rights specified in subparagraphs 7.a.
and 7.b. (if applicable) above which are coextensive with the rights granted
by BVI to Beacon in subparagraphs VI.B. and VI.E. of Exhibit "NP".
8. CONTINGENCY PORTION: In the event that Beacon elects to be paid
the Advance in accordance with the terms of subparagraph 3.a.(i)(A) above, BVI
shall fund BVI's applicable pro-rata percentage share of the Contingency
Portion as part of the Advance on a cash-flow basis (subject to and in
accordance with the applicable "Cash Flow Schedule") prior to delivery of the
"Final Negative Cost Report" for the Picture on the following terms and
subject to the following conditions:
a. BVI shall be entitled to review the production expenses for the
Picture, including weekly cost reports and the general ledger "show bible".
b. BVI will at no time be required to advance contingent funding in
an amount in excess of BVI's pro-rata percentage share of the Contingency
Portion of the Validated Budget for the Picture.
c. All funds advanced pursuant to this Paragraph 8. shall be
subject to the terms and provisions applicable to the Advance.
d. In the event that the contingency funding is advanced by BVI as
contemplated herein during the course of production, BVI and Beacon will
review the status of overall expenditures during post-production to ascertain
whether the actual final cost of the Picture will be less than the amount of
the Validated Budget.
e. Failure by Beacon to comply with the conditions of this
Paragraph 8. shall constitute a material breach by Beacon of this Agreement
and BVI shall have all rights and remedies available to BVI as a result
thereof; provided, that Beacon shall have an opportunity to cure any such
material breach and default as described above in accordance with Paragraph
21. below.
9. COPYRIGHT: Beacon represents and warrants that the copyright(s) in
the Picture and in the literary, dramatic and original musical material upon
which it is based or which are contained therein will be valid and subsisting
during the Term and during the maximum period of copyright in the United
States and those countries party to the Universal Copyright Convention, and
that Beacon has not done or permitted and will not do or permit to be done any
act or omission which would impair or diminish the validity or duration of
such copyright(s). Beacon further represents and warrants that no part of the
Picture or any such literary or dramatic material or original musical material
provided by Beacon in connection with the Picture is or will be in the public
domain during the maximum period of applicable copyright as a result of any
act or omission by BVI. The Picture when delivered to BVI shall contain a
copyright notice in the name of Beacon Communications Corp. as claimant in
compliance with the Universal Copyright Convention in the BVI Territory and
the Copyright Law of the United States. Beacon agrees to secure or have
secured and register such copyright in the Picture and related properties in
the United States and in such countries included in the BVI Territory as BVI
reasonably requests with respect to copyrights which are eligible for
copyright registration prior to Complete Delivery of the Picture in the BVI
Territory. Subsequent to Complete Delivery of the Picture, Beacon shall sign
all further documents BVI may reasonably request to protect and defend the
copyright in the Picture; provided, that if Beacon fails to sign any such
document within five (5) business days of BVI's written request, Beacon hereby
appoints BVI its irrevocable attorney-in-fact to sign any such document for
Beacon, and Beacon agrees that such appointment constitutes a power coupled
with an interest and is irrevocable throughout the term of BVI's rights
hereunder (i.e. in perpetuity). BVI shall provide to Beacon copies of any
documents signed by BVI on behalf of Beacon hereunder; provided, that failure
to provide such copies shall not be a breach hereof. BVI shall not be liable
to Beacon for any action or failure to act on behalf of Beacon within the
scope of authority conferred on BVI pursuant to this Paragraph 9. BVI agrees
to give Beacon timely notice of any legal challenges to Beacon's copyright in
the Picture in the BVI Territory in which BVI is duly served as a party.
10. PRESS ANNOUNCEMENTS AND PREVIEWS: Beacon shall not (and Beacon
shall not authorize or permit any person to) release information concerning
the Picture to the press in the BVI Territory or preview the Picture in the
BVI Territory either before or after delivery of the Picture to BVI without
the express prior written consent of BVI. Beacon and BVI agree that the
initial press announcement regarding BVI's acquisition of the Picture shall be
subject to the mutual prior approval of the parties hereunder.
11. SECURITY INTEREST/COPYRIGHT MORTGAGE/COMPLETION BOND:
The following provisions with respect to Beacon's obligations to grant
and to cause Presidential Productions, Inc. to grant, to BVI a security
interest and copyright mortgage in the Picture, as well as the obligations of
Beacon with respect to a completion bond, shall apply regardless of whether
Beacon elects to receive payment of the Advance in accordance with the terms
of subparagraph 3.a.(i)(A) or subparagraph 3.a.(i)(B) above:
a. Concurrent with the execution hereof, Beacon shall execute
and deliver, and shall cause PPI to execute and deliver, to BVI the Exclusive
License of Distribution Rights, Security Agreement & Mortgage of Rights
Including Copyright in the form attached hereto as Schedule "PE-1" (the "BVI
Security Agreement") pursuant to which Beacon and PPI shall jointly and
severally grant and assign to BVI a continuing first priority lien and
security interest in and to and copyright mortgage on the "Collateral" (as
such term is defined in subparagraph 2.(a) of the BVI Security Agreement), on
and subject to the terms and conditions contained in the BVI Security
Agreement.
b. At the request of Beacon, BVI agrees to negotiate in good
faith and enter into an inter-creditor agreement in form and substance
satisfactory to BVI with Beacon, any bank or financial institution providing
production financing for the Picture, the completion guarantor for the
Picture, any other distributor of the Picture granted rights by Beacon, the
Screen Actors Guild and/or the Director's Guild of America; provided, that
such inter-creditor agreement shall provide that (i) no secured party other
than BVI shall have any interest in the Collateral described in subsections
(i) and (ii) of subparagraph 2.(a) of the BVI Security Agreement; (ii) no
secured party shall have a security interest which is of higher priority than,
or equal priority to, the first priority security interest of BVI in the
Collateral described in subsection (iii) of subparagraph 2.(a) of the BVI
Security Agreement; (iii) no secured party shall have a security interest
which is of higher priority than the first priority security interest of BVI
in the Collateral described in subsections (iv) through (vii) of subparagraph
2.(a) of the BVI Security Agreement; and (iv) all such other secured parties
shall agree not to exercise any rights or interests, take any action or do
anything which would disturb or interfere with BVI's exercise and quiet
enjoyment of the distribution and other rights granted to BVI hereunder and
under the BVI Security Agreement.
c. Beacon agrees to obtain a completion bond with respect to the
Picture in form and substance satisfactory to BVI naming BVI as the sole
beneficiary thereof; provided, that BVI shall have a right of prior approval
with respect to the identity of the company issuing the aforesaid completion
bond; provided, further, that BVI hereby approves Fireman's Fund and Insurance
Company.
d. BVI shall enter into a distributor's assumption agreement or
comparable agreement with any of the applicable unions or guild, consistent
with BVIÕs past practices, solely with respect to the BVI Territory.
12. RIGHT OF FIRST NEGOTIATION/RIGHT OF FIRST REFUSAL for
Remakes/Sequels/Television Series/Direct to Video, etc.: Beacon represents and
warrants that it owns and controls all production and distribution rights in
the BVI Territory with respect to any sequel, remake, additional feature
film(s) and/or television series and/or specials and/or direct to video
productions based, in whole or in part, on the Picture (subject to the rights
of Wolfgang Petersen, Gail Katz and Andrew Marlowe, of which Beacon shall give
BVI a full written account as part of Complete Delivery of the Picture to BVI
[Beacon represents and warrants that each of the aforesaid parties has a right
of first negotiation to render services in connection with a motion picture
and television sequel(s) and remakes to the Picture]) (collectively,
"Sequel[s]", such rights, "Sequel Rights"). Beacon hereby grants to BVI a
Right of First Negotiation and a Right of First Refusal with respect to the
acquisition of all distribution rights for the BVI Territory with respect to
any and all Sequel(s) to the Picture in accordance with the following
provisions:
a. For purposes of this Paragraph 12., the term "Right of First
Negotiation" means that if Beacon should desire to exercise any Sequel Rights,
Beacon shall in each instance give written notice to BVI and immediately
thereafter negotiate with BVI with respect to acquisition by BVI of such
Sequel Rights and if, after the expiration of Sixty (60) days following such
notice from Beacon to BVI, no agreement shall have been reached, then Beacon
shall be free to negotiate elsewhere with respect to such Sequel Rights,
subject to BVI's Right of First Refusal set forth in subparagraph 12.b.
below.
b. For purposes of this subparagraph 12.b., the term "Right of
First Refusal" means that if Beacon and BVI fail to reach an agreement
pursuant to BVI's Right of First Negotiation under subparagraph 12.a. above,
Beacon shall not at any time enter into an agreement with a third party
regarding such of the Sequel Rights in the BVI Territory on "Financial Terms"
less than or equal to ^ ^ of BVI's last written bona fide proposal (for the
purposes of this subparagraph 12.b., the term "Financial Terms" shall be
deemed to be comprised of the provisions of an agreement regarding
[distribution fees and advance]). Beacon must in each instance resubmit to BVI
a proposed third party offer if such third party offer is less than or equal
to ^ ^ of BVI's last bona fide proposal, then BVI shall have a period of
Fifteen (15) business days to accept such resubmitted offer by written notice
to Beacon. If such third party offer is greater than the aforesaid last
written bona fide proposal of BVI, then Beacon shall have no obligation under
the terms of this subparagraph 12.b. to resubmit such third party offer to
BVI.
c. If BVI chooses not to accept the Financial Terms of an offer by
a third party, Beacon shall have a period of Forty Five (45) days thereafter
to enter into an agreement with such third party (but no other party) upon
Financial Terms equal to or better than such applicable Financial Terms which
BVI declined to match pursuant to the terms of subparagraph 12.b. above.
Beacon may not enter into an agreement with such third party after the
expiration of the aforesaid Forty Five (45) day period or enter into an
agreement on any terms with any other party at any time with respect to such
of the Sequel Rights without first offering BVI the opportunity to acquire
such of the Sequel Rights in accordance with the procedure set forth
hereinabove; provided, further, that BVI's option shall continue in full force
and effect, upon all of the terms and conditions of this Paragraph 12.
(subject to the terms of subparagraph 12.c. below), so long as Beacon retains
any right, title or interest in or to the Picture; provided, further, that
BVI's option shall inure to the benefit of BVI, its successors and assigns,
and shall bind Beacon and Beacon's successors and assigns.
d. It is understood and agreed that if under the foregoing terms of
this Paragraph 12., BVI fails to acquire certain specified Sequel Rights, then
BVI's rights under this Paragraph 12. with respect such specified rights in
the succeeding Sequels shall terminate. By way of example only, if BVI
pursuant to the terms of subparagraph 12.a. and 12.b. above does not acquire
distribution rights in the BVI Territory in Air Force One II (i.e. the
immediate Sequel to Air Force One), then BVI shall have no rights (subject to
the terms of subparagraph 12.e. below) under this Paragraph 12. with respect
to Air Force One III (i.e. the next immediate Sequel to Air Force One II).
However, BVI would retain all Sequel Rights other than such specified Sequel
Rights, e.g. in the preceding example, BVI would retain Sequel Rights with
respect, inter alia, to a television series based on the Picture.
e. The parties agree that the Sequel Rights and any and all
exercise thereof shall be subject to the following condition: In no event
shall Beacon exercise any (i) production or (ii) distribution rights in the
BVI Territory with respect to any Sequel or Sequels to the Picture prior to
the date which is three (3) years following the date of the initial theatrical
release of the Picture by BVI in the BVI Territory.
13. ERRORS AND OMISSIONS INSURANCE: Beacon shall obtain and maintain
Motion Picture and Distributor's Errors and Omissions Insurance in a customary
form from Fireman's Fund or a qualified insurance company reasonably
acceptable to BVI naming BVI a named insured. Such insurance shall be for a
minimum of ^ ^ with respect to any one (1) claim relating to the Picture and ^
^ with respect to all claims relating to the Picture in the aggregate. The
policy shall be for an initial period of not less than three (3) years
commencing as of the date on which principal photography of the Picture began
and shall provide for Thirty (30) days prior written notice to BVI in the
event of any revision, modification or cancellation and that it shall be
deemed primary insurance and that any insurance obtained by BVI shall be
excess insurance not subject to exposure until the coverage of Beacon's policy
shall be exhausted.
14. WAIVER OF INJUNCTIVE RELIEF: As between Beacon and BVI, Beacon
hereby irrevocably waives any right to injunctive relief or rescission of
rights, and hereby agrees that Beacon's sole and exclusive remedy in the event
of any breach or alleged breach of this Agreement by BVI and/or its parent
and/or subsidiaries of its parent shall be solely an action for damages.
15. NO THIRD PARTY BENEFICIARIES: This Agreement is not made and
shall not inure to the benefit of any person not a party hereto and shall not
be deemed to give any right or remedy to any third party (including any audit
rights).
16. GOVERNING LAW: This Agreement shall be governed by the laws of
the State of California applicable to agreements executed and to be wholly
performed therein. Beacon's consent to such jurisdiction is with respect to
this Agreement only.
17. JURISDICTION/AGENT FOR SERVICE: Beacon and BVI hereby
irrevocably submit to the jurisdiction of any California State or Federal
court sitting in Los Angeles, California in any action or proceeding arising
out of or relating to this Agreement, and Beacon and BVI hereby irrevocably
agree that all claims in respect of such action or proceeding shall be heard
and determined in such California State or Federal court. Beacon and BVI
hereby irrevocably waive, to the fullest extent each may effectively do so,
any and all objections to jurisdiction or venue in those courts in any such
action or proceeding. Beacon appoints TOM BLISS, BEACON COMMUNICATIONS CORP.,
1041 NORTH FORMOSA AVENUE, SUITE 200, SANTA MONICA BUILDING, LOS ANGELES,
CALIFORNIA 90046, as its agent to receive, on behalf of Beacon and its
property, service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding. Such service may be
made by mail or by delivering a copy of such process to Beacon in care of the
agent named above with a copy served on Beacon at Beacon's last known address,
and Beacon hereby irrevocably authorizes and directs such agent to accept such
service on its behalf. Beacon and BVI agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing herein shall affect the right of Beacon or BVI, as the case may be, to
serve legal process in any other manner permitted by law.
18. ASSIGNMENT: BVI shall have the right to assign this Agreement
and its rights and obligations hereunder in whole or in part to any of its
affiliates, subsidiaries and any entity owning all the stock of BVI.
Furthermore, BVI shall have the right to assign this Agreement and its rights
and obligations hereunder in whole or in part to any limited partnership or
other entity which (i) has a subsidiary of The Walt Disney Company as a
general partner thereof or is controlled by a subsidiary of The Walt Disney
Company and (ii) has entered into a distribution agreement with BVI including,
without limitation, Constellation Film Partners I, L.P. In the event that BVI
should exercise the aforesaid right to assign rights and obligations
hereunder, BVI shall remain liable for the performance of such obligations to
the extent that the assignee fails to perform such obligations.
19. CONFIDENTIALITY: BVI and Beacon mutually agree that the terms of
this Agreement are confidential and shall not, without the prior written
consent of the applicable party, be disclosed to any unauthorized person(s),
firm(s), corporation(s) or other entity, all of whom shall be informed of the
confidential nature of this Agreement and shall agree to be bound by the terms
and conditions of this Agreement including, without limitation, this Paragraph
19.
20. PAYMENTS: Subject to the terms of subparagraph 3.a.(iii) above, all
payments to Beacon hereunder shall be made care of the following address:
Beacon Communications Corp.
1041 North Formosa Avenue
Suite 200
Santa Monica Building
Los Angeles, CA 90046
Attention: Cynthia McWethy
21. RIGHT TO CURE: No non-recurring act or omission of any party
shall constitute an event of default or breach by such party of this Agreement
unless the non-breaching party shall first notify the party in writing setting
forth such alleged breach or default and such party shall not cure the same
within Ten (10) days after receipt of such notice; provided, however, that any
intentional breach of a material obligation of this Agreement which is not
capable of cure shall not require the foregoing notice and cure period prior
to constituting an event of default or breach under this Agreement.
22. FORCE MAJEURE: The parties agree that the Delivery Date shall be
subject to events of Force Majeure including, without limitation, fire,
earthquake, flood, epidemic, accident, explosion, strike, riot, civil
disturbance, embargo, war or act of God; provided, that if Beacon has not made
Complete Delivery of the Picture to BVI on or before the date which is Ninety
(90) days following the Delivery Date, then BVI shall have the right to
terminate this Agreement by written notice to Beacon (provided, that if BVI
should so terminate the Agreement, then Beacon shall within Thirty [30] days
following such termination by BVI pay BVI an amount equal to all sums
theretofore paid to Beacon by BVI hereunder [with interest at the rate
specified in subparagraph 3.a. above, from the date of receipt of such funds
by Beacon, in each instance]).
23. FOREIGN PREPARATION: It is understood and agreed that the terms
of this Paragraph 23. shall in no way be construed so as to limit the rights
of BVI under Paragraph 4. above. Nor in any way shall the terms of this
Paragraph 23. be construed to expressly or by implication set forth any
representation or warranty by BVI with respect to the manner or extent of any
distribution or exploitation of the Picture by BVI.
a. BVI RELEASE DATE: It is understood and agreed that Beacon will
use its best efforts consistent with the Validated Budget to make delivery of
the English language version of the Picture ("American Version") to Sony and
BVI by July 15, 1997 (subject to the terms of Paragraph 22. above) so as to
enable Sony to cause the Picture to be theatrically released in the United
States on or about August 1, 1997. Beacon acknowledges that BVI requires
between six (6) to eight (8) weeks to adapt (e.g. dub, subtitle) the American
Version of the Picture for release in major foreign countries. Beacon also
acknowledges that if the American Version of the Picture is delivered to Sony
in such time as to enable Sony to cause the Picture to be theatrically
released in the United States on or about August 1, 1997, BVI shall consider
causing the Picture to be released in major foreign countries between four (4)
to eight (8) weeks later. However, if the American Version of the Picture is
delivered to Sony in such time as to enable Sony to cause the Picture to be
theatrically released on or about September 1, 1997 or later, then BVI shall
consider causing the Picture to be theatrically released in major foreign
countries "day and date" with the American release. Therefore, if Beacon does
not deliver the American Version to BVI on or before July 15, 1997, BVI shall
require access and Beacon shall afford BVI access to all 35 mm work elements
in order to manufacture foreign elements in a timely manner (all such
activities, "Foreign Preparation"); provided, that such access does not
materially interfere with Beacon's completion of the Picture. Beacon agrees
that One Hundred percent (100%) of the additional costs in the course of the
aforesaid Foreign Preparation incurred by BVI on account of the delivery of
the Picture after July 15, 1997 shall be deemed recoupable Distribution Costs
under the terms of subparagraph 3.b.(ii) of this Agreement.
b. FOREIGN DUBBING PREPARATION: Beacon acknowledges that dubbing
the Picture for exploitation by BVI in so-called "dubbing territories" in the
BVI Territory requires between six (6) to eight (8) weeks of preparation
including, without limitation, selection and testing of dubbing actors, etc.
Beacon further acknowledges that any attempt by BVI to adhere to the
above-referenced distribution scheme (stated in relation to the date of
Beacon's delivery of the Picture to Sony) shall require BVI to have access to
certain material including, without limitation, all film and video elements
with respect to the Picture. Beacon agrees to use its best efforts to
cooperate with BVI in the course of its foreign dubbing preparation including,
without limitation, affording BVI prompt access to any and all of the
aforesaid materials as requested by BVI.
c. FOREIGN CENSORSHIP BOARDS: Beacon acknowledges that many major
foreign countries including, without limitation, Australia and the United
Kingdom, have film censorship boards which must review and pass on all films
to be publicly exhibited within such countries. Beacon further acknowledges
that a 35 mm copy of the Picture must be submitted by BVI to each such board
in the BVI Territory no less than eight (8) weeks prior to the date on which
the BVI hopes to cause such film to be publicly exhibited. Hence, with a view
to the BVI distribution scheme sketched above, Beacon agrees to provide BVI
with a 35 mm double system copy of the existing version of the Picture no less
than eight (8) weeks prior to the Delivery Date (as applicable).
24. PUBLICITY RESPONSIBILITIES OF BEACON: Beacon agrees to use its
reasonable efforts make Harrison Ford available for press and interviews in
the BVI Territory at a reasonable time prior to the initial theatrical release
of the Picture by BVI in the BVI Territory.
25. NOTICE: All notices, payments, accountings and other data which
BVI is required or may desire to send or deliver to serve upon Beacon shall be
delivered in person to an officer of Beacon, or deposited in the United States
mails, postage prepaid and registered, or by air courier or by overnight mail,
addressed to Beacon at:
Beacon Communications Corp.
1041 North Formosa Avenue
Suite 200
Santa Monica Building
Los Angeles, CA 90046
Copy to: Michael A. Mayerson, Esq.
Loeb & Loeb LLP
10100 Santa Monica Boulevard
Suite 2200
Los Angeles, CA 90067-4164
or at such other address or addresses as Beacon may designate from time to
time in writing.
All notices, payments, accountings, and other data which Beacon is
required or may desire to send or deliver to or serve upon BVI shall be
delivered in person to an officer of BVI, or deposited in the United States
mails, postage prepaid and registered, or deposited in the telegraph office
with all charges prepaid or provided for, addressed to BVI at:
Buena Vista International, Inc.
350 South Buena Vista Street
Burbank, CA 91521
Attention: Senior Vice President
Acquisitions and Business Affairs
The date of personal delivery, mailing, or delivery of such notice shall
be deemed the date or service of such notice or payment, unless otherwise
specified herein; provided, that any notice which commences the running of any
period of time for the exercise of any option or the performance of any other
act by BVI (or of Beacon, provided that Beacon is still operating business at
the notice address set forth above or as otherwise notified to BVI hereunder)
shall be deemed served when so delivered.
26. EXHIBIT "NP": In the event that the terms of this Agreement
conflict with the terms of Exhibit "NP" or the terms of any other exhibit
attached hereto (including, without limitation, Exhibit "SDT"), the terms set
forth in the Agreement will control.
27. EXHIBITS: Exhibits "R", "PE" and "PI" are attached hereto and
incorporated herein by this reference.
Please confirm your acceptance of the foregoing by signing in the space
provided below.
BUENA VISTA INTERNATIONAL, INC.
By:___________________________
Its:__________________________
ACCEPTED AND AGREED TO:
BEACON COMMUNICATIONS CORP.
By:___________________________
Its:__________________________
I.D.#_________________________
I accept the designation as agent for service of process as set forth in
Paragraph 17. above.
_______________________________
Tom Bliss
<PAGE>
Exhibit 10.2
^ Confidential Treatment Requested
TERM SHEET
LOCAL TELEVISION LICENSE AGREEMENT FOR
DENVER NUGGETS AND COLORADO AVALANCHE
TERM:
Seven years, beginning July 1 with the 1997-98 season. At least ninety (90)
days prior to October 1, 2003, the teams and Fox shall negotiate,
confidentially and exclusively, in good faith with each other with respect to
the terms and conditions under which Fox may acquire exclusive rights to a
subsequent term of at least five years. Should Fox and the teams be unable to
reach an agreement by October 1, 2003, the teams will present an offer
acceptable to the teams, of at least five years in duration, under which Fox
would retain the rights. Fox will then have the opportunity to accept or
decline the offer within a period of fourteen days. Should Fox decline the
offer, the teams shall be free to negotiate and conclude an agreement with any
third party, but not on terms more favorable to the third party than those
presented to Fox.
RIGHTS:
Ascent will license to Fox Sports its traditional local free over-the-air and
cable television rights for 65 regular season games and all available playoff
games of each of the Denver Nuggets and Colorado Avalanche. These rights will
be subject to the rules, regulations and national television contracts of the
NBA and NHL. Fox will assume all of the teams existing free over-the-air
obligations.
Fox's rights shall be exclusive within the teams' territories and shall
include all forms of television including, free standard over-the-air, CABLE,
DBS, MMDS, MDS, STV, LMDS, SMATV, Narrow and Broadband Services (to the extent
they are delivered as part of the entire service in full screen live video
with delivery securely restricted to applicable television territories), OVS
and Video Dial Tone. Pay-per-view games will be included only by mutual
agreement. Should any rights for Internet (except as noted above) or
non-traditional or undeveloped rights become available, Fox shall have rights
of first negotiation and first refusal for such rights.
Fox will have the right to determine the split between over-the-air and cable
telecasts, provided that Fox will make a reasonable effort to clear a minimum
of 20 games for each team on over-the-air television. Under no circumstances
shall Fox telecast more than half of either team's televised games on
over-the-air television. The teams can require Fox to provide carriage of
playoffs on either free over-the-air or cable television, with Fox to decide
between the two in its reasonable discretion, subject to existing free
over-the-air obligations.
RIGHTS
FEES:
Fox Sports will pay Ascent the following rights fees for 65 regular season
games of the Denver Nuggets and Colorado Avalanche during the corresponding
regular season:
1997-98 ^
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04 ^
In addition, for first round playoff games, the rights fee per game will be ^
times the average regular season game fee for the corresponding regular
season. For subsequent round playoff games, the rights fee will be ^ times
the average regular season game fee for the corresponding regular season.
PLAYOFF
BONUSES:
In any year a team makes the playoffs the following bonus will be paid:
First round ^
Second round
Conference Finals
Finals
Finals winner ^
The bonus is payable as part of the next season's rights fee. The bonus is
not cumulative.
STRUCTURE:
^
^ If fewer than 65 games per team per season are available for telecast by
Fox, then payments will be reduced pro rata and refunded within 30 days of the
end of the applicable respective playing seasons. With respect to force
majeure events, strikes or lock outs, the parties shall negotiate terms no
less favorable than Fox has agreed to with other teams.
LEAGUE
FEES:
The teams will be responsible for certain league fees, and Fox Sports will be
responsible for all outer market and extended market fees.
PRODUCTION:
Fox will be responsible for all production costs and will use the talent
currently employed by the teams at Fox's cost. Should the current talent
employed by the teams not be available in any year during the agreement, Fox
and the teams shall mutually agree on the new talent. The talent fee will be
a negotiated fee, in line with fees paid by Fox at other networks. Fox will
employ the producer/director employed by the teams for a minimum of 40 events
during each year of the agreement. The fee for the producer/director will be
negotiated and will be in line with fees paid by Fox at its other networks.
ADVERTISING:
The teams will retain two (2) minutes in each broadcast, at no cost, for use
in promoting the teams and/or ticket sales to the team's games. No sponsor
tags will be allowed in these promotional spots if they conflict with a
Network sponsor. Fox will provide Ascent with an additional two (2) minutes
in each broadcast at 50 percent of Fox's prior year average rate for sale to
naming and founding sponsors of the Pepsi Center.
Fox and the teams will agree to an appropriate level of exclusivity for naming
and founding sponsors but both parties agree that the degree of exclusivity in
a category will be related to the total commercial time (from both the teams
and Fox inventory) a sponsor obtains.
Fox shall honor all over-the-air television advertising time commitments and
any applicable and corresponding category exclusivities (subject to Fox's
standard time buy requirements for exclusivity) in existing team sponsorship
agreements and shall work with the teams in negotiating pending team
sponsorship agreements to best serve the prospective team sponsors for the
1997-98 and 1998-99 NBA and NHL seasons. Accordingly, Fox and the teams shall
negotiate, in good faith, to determine the amount of the payments to Fox for
television advertising based on average market rates obtained by Fox for
comparable Nuggets and Avalanche inventory, rather than any existing
advertising rate financial commitments to the sponsors for the 1997-98 and
1998-99 NBA and NHL seasons. The teams and Fox will negotiate ways in which
sales to television sponsors and team sponsors can be coordinated.
ARENA:
The teams and Fox will negotiate a package of tickets, suite ownership,
signage, etc., to be provided to Fox reasonably similar to the packages
provided to the teams' local television rights holders for the 1996-97
season. The teams will not provide tickets, suites, logo rights, signage etc.
to Fox for Fox to pass-through to television sponsors, as all such
non-television sponsorship elements will be retained by the teams for sale to
sponsors. In addition to the negotiated package, Fox will have the right to
purchase additional tickets on a priority basis for its sponsors.
RENEGOTIATION:
To the extent that any change is made in the rules, regulations or national
broadcasting agreements of either the NBA or NHL which materially and
adversely affects the rights of either party hereunder and which it not
otherwise compensated under the terms of the agreement, then the relevant team
will negotiate in good faith an appropriate amendment to this agreement, which
may be one that changes the fees payable to such team by Fox Sports.
WNBA:
Fox agrees that if the NBA awards Denver a WNBA team, Fox shall broadcast the
team's available local games on either free over-the-air or cable television
for the term of this agreement on terms to be more fully negotiated, but not
to include the team retaining 70 percent of advertising time on over-the-air
broadcasts.
This Terms Sheet summarizes the principal points of the agreement between the
parties and, after approval by the leagues, will be binding on and enforceable
against the parties, and govern their conduct until such time as the parties
enter into a more complete license agreement, the final form of which will be
subject to the approval of the leagues.
Agreed and Accepted:
Ascent EntertainmentFox Sports Rocky Mountain
Group, Inc.
By: /s/ Arthur M. Aaron By:/s/ Robert L. Thompson
Its: Vice President, Its:Senior Vice President
Business and Legal Affairs
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for the quarter ended September 30, 1997 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001002666
<NAME> ASCENT ENTERTAINMENT GROUP, INC.
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1.00
<CASH> 18,419
<SECURITIES> 0
<RECEIVABLES> 57,512
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 128,166
<PP&E> 311,759
<DEPRECIATION> 0
<TOTAL-ASSETS> 734,831
<CURRENT-LIABILITIES> 325,587
<BONDS> 50,000
0
0
<COMMON> 297
<OTHER-SE> 240,566
<TOTAL-LIABILITY-AND-EQUITY> 734,831
<SALES> 0
<TOTAL-REVENUES> 318,714
<CGS> 0
<TOTAL-COSTS> 266,463
<OTHER-EXPENSES> 81,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,329
<INCOME-PRETAX> (44,899)
<INCOME-TAX> 5,907
<INCOME-CONTINUING> (38,992)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,755)
<EPS-PRIMARY> (.97)
<EPS-DILUTED> (.97)
</TABLE>
